SECOND DIVISION

KEIHIN-EVERETT FORWARDING CO., INC., PETITIONER, v. TOKIO MARINE MALAYAN

INSURANCE CO., INC.** AND SUNFREIGHT FORWARDERS & CUSTOMS BROKERAGE,
INC., RESPONDENTS. G.R. No. 212107, January 28, 2019
REYES, J. JR., J.:

NATURE OF THE CASE:

Appeal the Decision of the Court of Appeals (CA) which modified the ruling of the Regional Trial Court
(RTC).

FACTS:
Honda Trading Phils. Ecozone Corporation (Honda Trading) ordered Aluminum Alloy Ingots from PT
Molten Aluminum Producer Indonesia (PT Molten). PT Molten loaded the goods in two container vans
which were, in turn, received in Indonesia by Nippon Express Co., Ltd. for shipment to Manila.

Aside from insuring the entire shipment with Tokio Marine & Nichido Fire Insurance Co., Inc.
(TMNFIC). Honda Trading also engaged the services of petitioner Keihin-Everett to clear and withdraw
the cargo from the pier and to transport and deliver the same to its warehouse in Biñan, Laguna.
Meanwhile, petitioner Keihin-Everett had an Accreditation Agreement with respondent Sunfreight
Forwarders whereby the latter undertook to render common carrier services for the former and to
transport inland goods within the Philippines.

The shipment arrived in Manila it was temporarily stored at an area in the Manila International Port
pending release by the Customs Authority. When the shipment was released from the pier by petitioner
Keihin-Everett and turned over to respondent Sunfreight Forwarders for delivery to Honda Trading, the
truck carrying the containers was hijacked and the one of the container van was reportedly taken away.
The said container van was subsequently found however, the contents thereof were no longer retrieved.
Only one of the container vans reached the warehouse. As a consequence, Honda Trading suffered losses.

Claiming to have paid Honda Trading's insurance claim for the loss it suffered, respondent Tokio Marine
filed a complaint for damages against petitioner Keihin-Everett. Tokio Marine alleged that it had been
subrogated to all the rights and causes of action pertaining to Honda Trading.

Petitioner Keihin-Everett denied liability because loss of this shipment occurred while the same was in
the possession of respondent Sunfreight Forwarders. Hence, petitioner Keihin-Everett filed a third-party
complaint against the latter, who, denied liability on the ground that it was not privy to the contract
between Keihin-Everett and Honda Trading. If at all, respondent Sunfreight Forwarders claimed that its
liability cannot exceed the amount fixed in its Accreditation Agreement with petitioner Keihin-Everett.

The RTC ruled that petitioner Keihin-Everett and respondent Sunfreight Forwarders were jointly and
severally liable to pay respondent Tokio Marine's claim. The RTC found the driver of Sunfreight
Forwarders as the cause of the evil caused. Under Article 2180 of the Civil Code, it provides: "Employers
shall be liable for the damages caused by their employees and household helpers acting within the scope
of their assigned tasks, even though the former are not engaged in any business or industry." Thus,
Sunfreight Forwarders is hereby held liable for the loss of the subject cargoes with Keihin-Everett, being
a common carrier. In case, Keihin-Everett pays for the amount, it has a right of reimbursement from
Sunfreight Forwarders. In the event of loss, destruction or deterioration of the insured goods, common
carriers are responsible, unless they can prove that the loss, destruction or deterioration was brought about
by the causes specified in Article 1734 of the Civil Code. In all other cases, they are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence.
Further, hijacking of a carrier's truck is not one of those included as exempting circumstance under Art.
1374.
Keihin-Everett moved for reconsideration of the foregoing RTC Decision.

The CA modified the ruling of the RTC insofar as the solidary liability of Keihin-Everett and Sunfreight
Forwarders is concerned. The CA went to rule that solidarity is never presumed. There is solidary liability
when the obligation so states, or when the law or the nature of the obligation requires the same. Thus,
because of the lack of privity between Honda Trading and Sunfreight Forwarders, the latter cannot simply
be held jointly and severally liable with Keihin-Everett for Tokio Marine's claim as subrogee. In view of
the Accreditation Agreement between Keihin-Everett and Sunfreight Forwarders, the former possesses a
right of reimbursement against the latter for so much of what Keihin-Everett has paid to Tokio Marine.
The dispositive portion of the CA Decision reads as follows:

Dissatisfied with the CA Decision, petitioner Keihin-Everett filed the instant petition with this Court.

ISSUE:
(1) Whether or not Tokyo Marine is a real party in interest and has therefore the capacity to file a suit
against herein Petitioner? – (YES)

(2) Whether or not Tokyo Marine has been subrogated to the rights of Honda Trading as against herein
Petitioner? – (YES)

(3) Whether or not Petitioner is liable to Honda Trading for breach of contract, notwithstanding the
fact that: the cargo was in possession of SUNFREIGHT when the same was hijacked; and? – (YES)

(4) Whether or not Petitioner can be absolved of liability on account of Fortiutous event? – (NO)

(5) Whether or not (Petitioner) Keihin and Sunfreight can be held solidarily liable to Honda Treading
for Breach of Contract – (NO)

(6) Whether or not Petitioner Keihin has the right to be reimbursed by Sunfreight. – (YES)
RULING:
(1) Keihin-Everett insisted that Tokio Marine is not the insurer but TMNFIC. While this assertion is
true, Insurance Policy No. 83-00143689 itself expressly made Tokio Marine as the party liable to pay the
insurance claim of Honda Trading pursuant to the Agency Agreement entered into by and between Tokio
Marine and TMNFIC. As properly appreciated by both the RTC and the CA, the Agency Agreement
shows that TMNFIC had subsequently changed its name to that of Tokio Marine. By agreeing to this
stipulation in the Insurance Policy, Honda Trading binds itself to file its claim from Tokio Marine and
thereafter to accept payment from it.

At any rate, even if we consider Tokio Marine as a third person who voluntarily paid the insurance claims
of Honda Trading, it is still entitled to be reimbursed of what it had paid. In the case of Pan Malayan
Insurance Corp. v. Court of Appeals, the insurer who may have no rights of subrogation due to
"voluntary" payment may nevertheless recover from the third party responsible for the damage to the
insured property under Article 1236 of the Civil Code. Under this circumstance, Tokio Marine's right to
sue is based on the fact that it voluntarily made payment in favor of Honda Trading and it could go after
the third party responsible for the loss (Keihin-Everett) in the exercise of its legal right of subrogation.

(2) Under Article 2207 of the Civil Code as follows:

Art. 2207. If the plaintiffs property has been insured, and he has received indemnity from the
insurance company for the injury or loss arising out of the wrong or breach of contract complained of,
the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the
person who has violated the contract. If the amount paid by the insurance company does not fully cover
the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing
the loss or injury.
Since the insurance claim for the loss sustained by the insured shipment was paid by Tokio Marine as
proven by the Subrogation Receipt – showing the amount paid and the acceptance made by Honda
Trading, it is inevitable that it is entitled, as a matter of course, to exercise its legal right to subrogation as
provided

It must be stressed that the Subrogation Receipt only proves the fact of payment. This fact of payment
grants Tokio Marine subrogatory right which enables it to exercise legal remedies that would otherwise
be available to Honda Trading as owner of the hijacked cargoes as against the common carrier (Keihin-
Everett). In other words, the right of subrogation accrues simply upon payment by the insurance company
of the insurance claim. As the Court held: The payment by the insurer to the insured operates as an
equitable assignment to the insurer of all the remedies which the insured may have against the third party
whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor
does it grow out of any privity of contract. it accrues simply upon payment by the insurance
company of the insurance claim.

Indeed, the right of subrogation has its roots in equity. It is designed to promote and to accomplish justice
and is the mode which equity adopts to compel the ultimate payment of a debt by one who, in justice and
good conscience, ought to pay. Consequently, the payment made by Tokio Marine to Honda Trading
operates as an equitable assignment to the former of all the remedies which the latter may have against
Keihin-Everett.

(3) Finally. Keihin-Everett maintained that at the time when the cargoes were lost, it was already in
the custody of Sunfreight Forwarders. Notwithstanding that the cargoes were in the possession of
Sunfreight Forwarders when they were hijacked, Keihin-Everett is not absolved from its liability as a
common carrier. Keihin-Everett seems to have overlooked that it was the one whose services were
engaged by Honda Trading to clear and withdraw the cargoes from the pier and to transport and deliver
the same to its warehouse. In turn, Keihin-Everett accredited Sunfreight Forwarders to render common
carrier service for it by transporting inland goods. As correctly held by the CA, there was no privity of
contract between Honda Trading (to whose rights Tokio Marine was subrogated) and Sunfreight
Forwarders. Hence, Keihin-Everett, as the common carrier, remained responsible to Honda Trading for
the lost cargoes.

In this light, Keihin-Everett, as a common carrier, is mandated to observe, under Article 1733 of the Civil
Code, extraordinary diligence in the vigilance over the goods it transports according to all the
circumstances of each case. In the event that the goods are lost, destroyed or deteriorated, it is presumed
to have been at fault or to have acted negligently, unless it proves that it observed extraordinary diligence.
To be sure, under Article 1736 of the Civil Code, a common carrier's extraordinary responsibility over the
shipper's goods lasts from the time these goods are unconditionally placed in the possession of, and
received by, the carrier for transportation, until they are delivered, actually or constructively, by the
carrier to the consignee, or to the person who has a right to receive them. Hence, at the time Keihin-
Everett turned over the custody of the cargoes to Sunfreight Forwarders for inland transportation, it is still
required to observe extraordinary diligence in the vigilance of the goods. Failure to successfully establish
this carries with it the presumption of fault or negligence, thus, rendering Keihin-Everett liable to Honda
Trading for breach of contract. (ISSUE 3)

It bears to stress that the hijacking of the goods is not considered a fortuitous event or a force majeure.
Nevertheless, a common carrier may absolve itself of liability for a resulting loss caused by robbery or
hijacked if it is proven that the robbery or hijacking was attended by grave or irresistible threat, violence
or force. In this case, Keihin-Everett failed to prove the existence of the aforementioned instances.
(ISSUE 4)

(5) There is solidary liability only when the obligation expressly so states, when the law so
provides, or when the nature of the obligation so requires. Thus, under Article 2194 of the Civil Code,
liability of two or more persons is solidary in quasi-delicts. In this case, Keihin-Everett's liability to
Honda Trading (to which Tokio Marine had been subrogated as an insurer) stemmed not from quasi-
delict, but from its breach of contract of carriage. Sunfreight Forwarders was only impleaded in the
case when Keihin-Everett filed a third-party complaint against it. As mentioned earlier, there was no
direct contractual relationship between Sunfreight Forwarders and Honda Trading. Accordingly, there
was no basis to directly hold Sunfreight Forwarders liable to Honda Trading for breach of contract. If
at all, Honda Trading can hold Sunfreight Forwarders for quasi-delict, which is not the action filed in
the instant case.

(6) The case of Torres-Madrid Brokerage, Inc. v. FEB Mitsui Marine Insurance Co.,:
We do not hereby say that TMBI must absorb the loss. By subcontracting the cargo delivery to
BMT, TMBI entered into its own contract of carriage with a fellow common carrier.
The cargo was lost after its transfer to BMT's custody based on its contract of carriage with
TMBI. Following Article 1735, BMT is presumed to be at fault. Since BMT failed to prove that it
observed extraordinary diligence in the performance of its obligation to TMBI, it is liable to TMBI for
breach of their contract of carriage.
In these lights, TMBI is liable to Sony (subrogated by Mitsui) for breaching the contract of
carriage. In turn, TMBI is entitled to reimbursement from BMT due to the latter's own breach of its
contract of carriage with TMBI. x x x35

In the same manner, Keihin-Everett has a right to be reimbursed based on its Accreditation
Agreement with Sunfreight Forwarders. By accrediting Sunfreight Forwarders to render common
carrier services to it, Keihin-Everett in effect entered into a contract of carriage with a fellow common
carrier, Sunfreight Forwarders.

It is undisputed that the cargoes were lost when they were in the custody of Sunfreight Forwarders.
Hence, under Article 1735 of the Civil Code, the presumption of fault on the part of Sunfreight
Forwarders (as common carrier) arose. Since Sunfreight Forwarders failed to prove that it observed
extraordinary diligence in the performance of its obligation to Keihin-Everett, it is liable to the
latter for breach of contract. Consequently, Keihin-Everett is entitled to be reimbursed by Sunfreight
Forwarders due to the latter's own breach occasioned by the loss and damage to the cargoes under its care
and custody. As with the cited Torres-Madrid Brokerage case, Sunfreight Forwarders, too, has the option
to absorb the loss or to proceed after its missing driver, the suspect in the hijacking incident.